“Quite frankly, this lawsuit was surprising,” said Janet Sichterman, a spokesperson for the plant’s owner, Grain Processing Corp.“Normally, we would just resolve the issues between the two of us.”

James Larew, the lawyer representing concerned Muscatine residents who formed a community group earlier this year, said he plans to file a petition asking the judge to give the plant’s neighbors a seat at the negotiating table alongside the state and the company. “We’d at least like to be heard in these negotiations,” he said.

The plant, which processes corn into beverage alcohol, ethanol, starches and syrups, sits on the edge of the town’s working-class South End neighborhood, where haze and a pungent odor hang in the air.

At the heart of the case is an air pollution regulation the company, known as GPC, also was accused of violating in 2006. When plants undergo significant expansions or modifications, they must install the best available pollution control equipment and analyze the potential effects on the nearby community’s air.

In both the current case and the 2006 case, state regulators at the Department of Natural Resources allowed GPC to avoid this added review, then discovered later that the company couldn’t meet the limits it had agreed to.

The petition filed Thursday alleges that a piece of equipment called a dryer, which is used to cook corn, has been releasing more fine particles and sulfur dioxide than allowed since at least June 2010. Both pollutants can cause respiratory problems, and an air monitor near the plant has picked up more than 30 instances this year when sulfur dioxide reached potentially unsafe levels.

What’s not in the lawsuit: The original permit allowing the dryer to be installed without requiring a more rigorous review in 1991 “was an error and never should have been allowed,” according to an internal DNR engineering evaluation obtained by iWatch News.

The same equipment also failed a test in 2005, emitting almost twice the allowed amount of pollution. But regulators chose to increase GPC’s limit and again allow it to avoid a more stringent review.

After GPC began burning a different fuel in the dryer in 2010, tests indicated it was releasing more than three times the allowed amount of fine particles and more than twice the allowed amount of sulfur dioxide. For more than a year, the company and regulators have been going back and forth – adjusting pollution control equipment, scheduling further tests, then canceling them – but GPC has yet to prove it can comply with its pollution limits, the lawsuit says.

Another count in the lawsuit highlights the vagaries of a regulatory system that is both complex and heavily reliant on self-reporting. GPC failed to self-identify as a plant subject to a specific rule requiring tighter control of toxic emissions, the attorney general alleges. The company eventually asked regulators if the rule applied and, since being told it did, has taken steps toward following it. Nonetheless, the state says GPC missed deadlines because it started too late.

A DNR study of GPC’s toxic emissions is on hold as the department deals with other issues at the plant it believes are more pressing. Last year, the plant released more lead – a toxic metal that can damage the nervous system – than any facility in Iowa and more acetaldehyde – a probable carcinogen – than almost any plant in the country, according to government data.

Sichterman said the company believes it has resolved the violations related to the applicability of the rule governing toxic emissions and a wastewater issue that is also included in the lawsuit. GPC is working to address the problems with the dryer, she said.

In an interview this summer with iWatch News, GPC’s environmental director, Mick Durham, said the violations that have since led to the lawsuit were minor. “There will be some type of fine,” he said, “and we’ll end up paying it.”

But Brian Hutchins, the head of DNR’s compliance office, said, “These are significant violations.” In the petition, the attorney general asks the court to fine GPC up to $10,000 per violation per day and to prevent the company from violating air pollution rules in the future.

In that case, DNR officials determined that the company had been violating the terms of its permit for more than a decade. As part of the agreement, GPC agreed not to violate certain air pollution rules – the same rules the attorney general on Thursday accused the company of breaking.